Author Topic: Shortcut to FIRE  (Read 2668 times)

steveo

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Shortcut to FIRE
« on: March 17, 2016, 05:49:46 AM »
On here we often talk about what it takes to FIRE and we use the 4% WR as a basis for when enough is enough. Some people go for a lower rate to increase safety.

I'm interested in what is the quickest way to get to FIRE.

Here is my plan:-

1. Pay off the house (done)
2. Get to a 6% WR (I'm about 14% now)
3. Work part time (say 20 hours per week which for me would be 2 days at work and 1/2 day at home) for 5 years. If we save anything during this phase we may be able to quit earlier than 5 years.
4. Retire on a VWR where the lowest expenses could be lived on but the kids wouldn't be getting much support other than a roof over their head and food on the table. If it's just myself and my wife at home I think that the lowest expenses would be fine for at least 5 years and truthfully probably a lot longer.

I've done the figures on this on cFIREsim and this has a 94.83% success rate.

Work really isn't that bad for me but I'm sick of turning up 4 days a week (1 day at home) and dealing with all the stress and drama. It just doesn't interest me. I think the 2 days of turning up to work would be fine.

Thoughts on my plan and do you have ways to get to FIRE quicker for yourselves ?
« Last Edit: March 17, 2016, 05:54:20 AM by steveo »

Bertram

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Re: Shortcut to FIRE
« Reply #1 on: March 17, 2016, 06:24:42 AM »
Well, it's not a shortcut, as you don't get there faster. You'll get to FI later if you reduce your earnings.

But nevertheless I think the plan has attractive attributes, in that you get more quality of life earlier. I wouldn't rely on an  hypothetical number of a simulator at this point, simply because the last few years have not been average, and i don't think anybody expects the next few years to be average. However the first 10 years of FI are be the most decisive for success at the end of 30 years. (Sequence of return risk, etc.), so if you expect the first few years to be rather rough the real probability of succes would be lower.

So it's probably a good idea to think about what you Plan Bs could be. E.g. how difficult you think it would be to pick up where you left off in 3 or 5 years to increase your income again. Whether you have buffer in your expenses that would allow you to reduce them further. What you really want to avoid is getting into a downward spiral and doing nothing about it for 15 years, when it might become really difficult to get back on course.

So in general I think it's a good idea to delay FI if it helps you get some strongly needed quality of life back a bit earlier. But you should closely monitor average case/worst case scenarios and be willing to increase income again down the road (or else lower expenses). The easier it would be to get back to work at the current income the more likely I'd take that risk of a temperary FI. Probably also has something to do with age, below 40 I'd be more willing to try it than in mid to late 50s.

FrugalFan

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Re: Shortcut to FIRE
« Reply #2 on: March 17, 2016, 06:39:34 AM »
I've seen some versions of similar plans that seemed really good, but this version sounds a bit risky. I guess the living off the "lowest expenses" part makes it seem like your budget would be pretty bare bones, which doesn't leave much room for adjustments or buffers if the market tanks. I also don't like the sounds of number 4 (I don't know if you were exaggerating but kids need a bit more than that if you can afford it). I agree with Bertram that a lot depends on whether you would be able to ramp back up at work if things weren't going well. If you can do that, then the risk seems minimal. If things are not going well you either work more hours or work longer.

chubbybunny

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Re: Shortcut to FIRE
« Reply #3 on: March 17, 2016, 07:18:10 AM »
This is a similar conversation that we've had at our house, though it was more about what would happen if DH and I were both laid off at the same time.  At 4% WR, we'd be stuck with 1/2 our current spending level.  Not gonna fly. I think 7.8% WR would do it?  No, I'm not going to calculate when we'd run out of money.  Obviously we would need to find part time work.  This might be okay, especially if it's something we enjoy.  Even if we stopped investing, our current investments would continue to grow and we can continue our current lifestyle when we retire.

Two other things that we've thrown around were moving overseas to a place that has affordable healthcare, and selling the house and living in an RV.  With two kids in tow, both of these options are going to come with some big sacrifices.  So we bide our time.

steveo

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Re: Shortcut to FIRE
« Reply #4 on: March 17, 2016, 02:29:40 PM »
Thanks for the feedback.

When it comes to buffer and plan B options I think that there is still plenty there:-

1. The plan assumes no savings for the 5 years of part time work. There will be savings.
2. We could downsize the house. I wouldn't do that quickly but we could do it later.
3. Our expenses should go down. We have 3 kids ranging from 5 to 14 now. The youngest would be 13 and the older 2 20 & 22 by the time we completely quit work.
4. We could keep working for longer than 5 years.
5. Social security and inheritance can get in at some point.

I honestly think that this is easily doable. It does delay the FIRE date but it also means that we get to increase our free time a lot quicker.